In a perfect world, you would get a small tax refund every year. No one wants to owe money at the end of the year, but those who get thousands back essentially gave the government an interest-free loan when they could have made this money work for them. Tax planning is challenging, however, especially if your income or applicable deductions change from year to year. As a result, a lot of Americans owe money during tax time and need an extension to pay it in full. Below, an accountant from Erie & Associates, P.C. shares what you should know about extensions this filing season. 

What Is a Tax Extension? 

Federal tax returns are typically due on April 15 every year, but those who need more time to file can request a six-month extension. Owing more than anticipated is one of the most common reasons why people request an extension, but you can also take an extension if you simply need more time to organize any documents or face some other issue that demands your full attention. If you do request an extension for a year in which you owe the IRS money, the amount owed will accumulate penalties, fees, and interest until you pay it. 

How Do You Secure a Tax Extension?

There are two ways to request an extension from the IRS. If you have the funds to make an estimated payment with a credit or debit card, doing so before April 15 will automatically provide an additional six months to file the accompanying return. If you cannot afford to make a payment by this deadline, an accountant can complete Form 4868 for you before April 15 and file it with the appropriate IRS office. If you claim residence in Texas, for example, the form will go to the Department of the Treasury, Internal Revenue Service Center: Austin, TX 73301-0045. 

If you need help filing an extension for 2017 or want to start tax planning for 2018, turn to an accountant at Erie & Associates, P.C. in Texarkana, TX. This fully licensed and certified accounting firm is proud to provide comprehensive tax planning services for clients throughout Bowie County. You can schedule an appointment with an accountant to discuss your financial needs by visiting the website or calling (903) 792-6651.